President Barack Obama jetted back to Hawaii last night to continue his holiday vacation, just hours after Congress passed a deal to avoid the fiscal cliff.

The consensus among political observers is that Obama leaves Washington victorious after winning $620billion in tax hikes from Republicans in exchange for minimal spending cuts.

The President was in a triumphant mood
as he addressed the nation after the vote on Capitol Hill - even winking
at photographers before boarding Air Force One for a flight back to the beach-front mansion where Michelle and the children are staying.

The vacation extension is costing taxpayers an estimated $3.2million - bringing the total cost of the First Family's transportation to and from Hawaii to more than $7million, according to some tallies.

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Smirk: President Barack Obama winks as he arrives to make a statement regarding the passage of the fiscal cliff bill in the Brady Press Briefing Room at the White House

Remarks: President Obama addresses the media moments after the fiscal cliff deal passes in the Republican-controlled House

Approval
of the bill is a big win for President Obama, who campaigned for
re-election on a promise to raise taxes on the wealthiest but faced
stiff opposition from congressional Republicans

The eagle has landed: Obama arrived in Hawaii early Wednesday morning to continue his holiday vacation

The President landed at Joint Base Pearl Harbor-Hickam in Honolulu before dawn and returned to the company of Michelle and his daughters, who stayed behind on vacation.

Republicans have been accused of
surrendering in the deal, which won't raise taxes for the middle class,
but will increase rates for Americans making more than $400,000 for
individuals and $450,000 for couples.

That was higher than the thresholds of $200,000 and $250,000 that Obama campaigned for.

The deal would raise taxes by $41 for every $1 cut from
the budget, the non-partisan Congressional Budget Office revealed
yesterday.

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PRESIDENT'S VACATION EXTENSION COSTS TAXPAYERS MORE THAN $3M

The U.S. House passed the fiscal cliff bill about 10.45pm on Tuesday and Obama boarded Air Force One to return to Hawaii just hours later.

The President cut short his holiday vacation to return to Washington and oversee fiscal cliff negotiations.

The second flight to Hawaii is costing taxpayers an estimated $3.2million.

That's on top of the $4million already spent to ferry the First Family to their beachfront rental home on the island of O'ahu.

Air Force One costs about $180,000 an hour to fly - so the ten-hour trip to Hawaii costs about $1.7million each way.

Bloomberg reported that 77.1 per cent of U.S. households would see a tax increase in 2013 after the payroll tax cut expires.

But remarkably, in a party that swore
off tax increases two decades ago, dozens of Republicans supported the
bill at both ends of the Capitol.

The final tally was 257 for the bill, and 167 against.

Already there is talk among some house Republicans of a revolt against House Speaker John Boehner's leadership.

Majority Leader Eric Cantor and Majority Whip Kevin McCarthy, the number two and number three Republicans in the house, broke ranks and voted against the bill, along with two-thirds of the Republican caucus.

Some Republicans are already beginning to buck Boehner's leadership and are promising to withhold their support for him when it comes time to elect a House Speaker for the new session of Congress on Sunday, the conservative news site Breitbart.com reports.

Approval
of the bill is a big win for President Obama, who campaigned for
re-election on a promise to raise taxes on the wealthiest but faced
stiff opposition from congressional Republicans.

Obama said that he will sign the bill into law when it arrives at his desk.

Moments after the deal was approved in the House, Obama, flanked by Vice President Joe Biden, commended lawmakers for their efforts.

'Thanks to the votes of Republicans
and Democrats in Congress I will sign a law that raises taxes on the
wealthiest 2 per cent of Americans while preventing tax hikes that could
have sent the economy back into recession.'

But the president warned that there is still more work to be done.

He said that America's deficit is still too high, and that he will not debate Congress on raising the debt ceiling.

'We have a lot of work to do in 2013,' he said.

Obama cut a Hawaii vacation short to
see a fiscal cliff agreement go through. Now that the deal is done, it's 'aloha' once
again for the president, who is now en route back to a sprawling rental home in Kailua on the island of O'ahu.

Aloha: President Obama waves outside Air Force One before returning to Hawaii and his new year's vacation

Divisive: Rep Eric Cantor, left, the number two Republican leader in the House, said he opposed the bill, indicating a potential split with House Speaker Boehner, right

Back to work: House Speaker John Boehner, who voted in favor of the measure, is seen arriving at the Capitol on New Years Day

He made a bee line to Andrews Air Force Base minutes after the news conference on the House vote.

While lawmakers can be satisfied knowing that they helped stave off a fiscal crisis, the road to an agreement wasn't always so peaceful.

Politico reported that Senate Democrat Harry Reid drew the ire of House Speaker John Boehner when the two came face-to-face last Friday - when a fiscal cliff deal was anything but in sight.

Republicans had earlier considered adding hundreds of billions of dollars in spending cuts after the bill had already passed the Senate with strong bipartisan support.

That would have triggered further partisan warfare and pushed the crisis well past a self-imposed midnight deadline on January 1.

Opposition from House Republicans
threatened to imperil the compromise deal that won overwhelming
bipartisan backing in the Senate in a vote held just a few hours into
the new year.

Rep Eric Cantor, the number
two Republican leader in the House, said he opposed the bill, a split with Boehner.

Boehner voted in favor of the measure in a move seen as unusual because House speakers typically do not vote.

Before Tuesday night's vote,
prominent Republicans went after fellow party members as they took to
Twitter to vent their outrage.

Former
House Speaker and presidential candidate Newt Gingrich tweeted: 'The
[GOP] has been engaged in a two month dance of defeat and surrender! I
hope tonight is the end of this self defeating strategy.'

Real
estate mogul and media mouthpiece Donald Trump added: 'I am a
Republican...but the Republicans may be the worst negotiators in
history!'

Opposition: At least two Republican Congressmen have tweeted that they will vote against the vill

Fox News Radio correspondent Todd Starnes posted: 'This is what happens when your political party is led by an emotionally compromised weeper.'

CBO figures found that the agreement would add another $3.9trillion to the national deficit.

The bill would amount to the biggest tax hike in more than four decades - raising a reported $620billion in new revenue and cutting just $15billion from the budget.

But one group that will not see broad increases in tax rates are the Hollywood's heavy hitters.

Breitbart reported that the agreement extends 2004 tax incentives for TV and movie productions that would receive a $15million-$20million deduction for all films and programs.

And that's not all, as industries like NASCAR, rum and algae growers and electric motorcycle manufacturers will also enjoy millions in tax incentives, according to ABC News.

There is also a NASCAR tax credit, which allows speedways to deduct their costs over seven years.

Republicans swept into power in the House in 2010 on a Tea Party wave with promises to reduce the size of government and lower taxes.

'Without substantial, real first year cuts in spending I can't vote for the bill passed by the Senate late last night,' Representative Jason Chaffetz, a Utah Republican tweeted.

According to an analysis from Moodys, the bill is likely to be the biggest tax increase since 1968. President Lyndon signed a 10percent tax hike into law after deficits swelled from spending on the Vietnam War and his Great Society social programs.

The Senate vote came about five hours after the White House and congressional Republicans struck a deal.

The vote was an overwhelming 89-8 and came well after midnight on New Year's Day.

Jubilant: Vice President Joe Biden gives two thumbs up after the Senate passed the fiscal cliff deal

The legislation blocks spending cuts for two
months, extends unemployment benefits for the long-term jobless,
prevents a 27 per cent cut in fees for doctors who treat Medicare
patients and prevents a spike in milk prices.

A last-minute addition would also prevent a $900 pay raise for members of Congress from taking effect in March.

Vice President Joe Biden was on hand to sell the measure to Senate Democrats at a meeting at the Capitol on Monday night.

Earlier in the day, President Obama announced that a deal to avert billions of dollars of tax
increases that will kick in at midnight is 'within sight, but it's not
done yet.'

He lamented that he and Congress were
unable to reach a 'grand deal' to tackle the debt and reform the tax
code - but said he would settle for a plan to stop taxes from going up
on all but the richest Americans.

'Our
most immediate priority is to prevent taxes from going up on middle
class families tomorrow. I think that is a modest goal we can
accomplish,' he said.

Last ditch: US Senate Minority from Kentucky Mitch McConnell, centre, arrives on Capitol Hill on the last day of talks to avert the so-called fiscal cliff today

Final chance: House Speaker John Boehner of
Ohio, left, and House Majority Leader Eric Cantor of Va., right, arrived
on Capitol Hill on Monday to discuss
tax hikes and spending cuts

Several leading Republicans, most
notably Sen John McCain, lambasted Obama for what they said was a
partisan statement that had set back chances of a deal.

Senator
Bob Corker of Tennessee on the Senate floor that his 'heart was still
pounding' after a 'very unbecoming' Obama speech before a 'pep rally'.

A late dispute over the estate tax produced allegations of bad faith from all sides.

McConnelll, the Senate Republican leader - shepherding final talks with Biden - agreed with Obama that an overall deal was near.

In remarks on the Senate floor, he
suggested Congress move quickly to pass tax legislation and 'continue to
work on finding smarter ways to cut spending' next year.

The White House and Democrats
initially declined the offer, preferring to prevent the cuts from
kicking in at the Pentagon and domestic agencies alike. Officials said
they might yet reconsider, although there was also talk of a short-term
delay in the reductions.

While the deadline to prevent tax
increases and spending cuts was technically midnight, passage of
legislation by the time a new Congress takes office at noon on Jan. 3,
2013 - the likely timetable - would eliminate or minimize any
inconvenience for taxpayers.

At about 3pm McConnell took to the Senate floor to announce, 'I can report that we’ve reached an agreement on all of the tax issues. We are very, very close.'

The potential deal appeared to be centred around raising tax rates for families earning more than $450,000 a year and individuals who make more than $400,000.

At the same time delaying for three months the 'sequester' that would trigger tens of billions of dollars in spending cuts at the Pentagon and other federal agencies while unemployment insurance, a key issue for Democrats, would be extended.

WHAT'S THE DEAL? HIGHLIGHTS OF FISCAL CLIFF AGREEMENT

Income tax rates: Extends decade-old tax cuts on incomes up to $400,000 for individuals, $450,000 for couples. Earnings above those amounts would be taxed at a rate of 39.6 per cent, up from the current 35 per cent. Extends Clinton-era caps on itemized deductions and the phase-out of the personal exemption for individuals making more than $250,000 and couples earning more than $300,000.

Estate tax: Estates would be taxed at a top rate of 40 percent, with the first $5 million in value exempted for individual estates and $10 million for family estates. In 2012, such estates were subject to a top rate of 35 percent.

Capital gains, dividends: Taxes on capital gains and dividend income exceeding $400,000 for individuals and $450,000 for families would increase from 15 percent to 20 percent.

Alternative minimum tax: Permanently addresses the alternative minimum tax and indexes it for inflation to prevent nearly 30 million middle- and upper-middle income taxpayers from being hit with higher tax bills averaging almost $3,000. The tax was originally designed to ensure that the wealthy did not avoid owing taxes by using loopholes.

Other tax changes: Extends for five years Obama-sought expansions of the child tax credit, earned income tax credit, and an up to $2,500 tax credit for college tuition. Also extends for one year accelerated 'bonus' depreciation of business investments in new property and equipment, a tax credit for research and development costs and a tax credit for renewable energy such as wind-generated electricity.

Unemployment benefits: Extends jobless benefits for the long-term unemployed for one year.

Cuts in Medicare reimbursements to doctors: Blocks a 27 per cent cut in Medicare payments to doctors for one year. The cut is the product of an obsolete 1997 budget formula.

Social Security payroll tax cut: Allows a 2 percentage point cut in the payroll tax first enacted two years ago to lapse, which restores the payroll tax to 6.2 per cent.

Across-the-board cuts: Delays for two months $109 billion worth of across-the-board spending cuts set to start striking the Pentagon and domestic agencies this week. Cost of $24billion is divided between spending cuts and new revenues from rules changes on converting traditional individual retirement accounts into Roth IRAs.

Speaking on the Senate floor - where
members were convening on New Year's Eve for the first time since 1995 -
Senator Tom Harkin of Iowa thundered: 'No deal is better than a bad
deal and this looks like a very bad deal the way this is shaping up.'

The fiscal cliff is a series of tax rises and budget cuts that take effect on January 1st 2013 unless the White House and Congress reach an agreement to start reducing the country's $16 trillion-plus debt.

Biden and McConnell served in the Senate together for 23 years. The vice-president had been absent from fiscal cliff negotiations but was brought in when McConnell telephoned him after discussions with Senator Harry Reid, the Democratic Majority Leader, ran into the sand.

The deal would represent major concessions for both Democrats and Republicans - President Barack Obama campaigned on raising taxes for families making more than $250,000 while Republicans have been adamantly opposed to any tax increases.

Aides briefed that Biden and McConnell spoke at 12.45am on December 31st and then again at 6.30am.

Some economists predict that going over
the 'fiscal cliff' could eventually throw the U.S. economy back into
recession, though if the deadline passes politicians still have several
weeks to keep the tax rises and spending cuts at bay by repealing them
retroactively if a deal is reached.

Biden had proposed raising taxes on individuals earning more than $360,000 annually and families with income of more than $450,000. McConnell responded by offering a tax rise for individuals above $450,000 and couples who earn more than $550,000.

Democratic negotiators insist that McConnell will have to go significantly lower to win support from their party while Republicans argue that dropping the tax rise threshold would make it more difficult for the Grand Old Party leader to win over fellow Republicans.

Any deal that passes in the Senate will
have to be voted on by the House of Representatives - a much higher
hurdle because it is controlled by Republicans and John Boehner, the
Speaker, has a tenuous hold over his caucus.

In an interview on NBC's Meet the
Press' that was broadcast on Sunday, President Obama blasted
congressional Republicans for waiting out the clock as the nation edges
closer to the so-called fiscal cliff.

'We've been talking to Republicans but they have a hard time saying 'yes,' Obama said Sunday.

'They
say that their biggest priority is making sure that we deal with the
deficit in a serious way, but the way they're behaving is that their
only priority is making sure that tax breaks for the wealthiest
Americans are protected,' Obama said Sunday. 'That seems to be their
only overriding, unifying theme.'

Obama said he had tried to negotiate with Republicans but his efforts had been blocked.

He insisted he had met Republicans
more than half way on their
demands, citing that he reduced his initial demand for revenue from
$1.6trillion to $1.2trillion, agreed to entitlement reforms, and has
already passed spending cuts such as the $1 trillion as part of the
Budget Control Act in 2011.

'What's
been holding us back is the dysfunction here in Washington,' Obama said.

'And if people start seeing that on January 1st this problem still
hasn't been solved, that we haven't seen the kind of deficit reduction
that we could have had had the Republicans been willing to take the deal
that I gave them, if they say that people's taxes have gone up, which
means consumer spending is going to be depressed, then obviously that's
going to have an adverse reaction in the markets.'